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TMI Blog2024 (8) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... l and Medium Enterprises Development Act, 2006, in 2007, the ineligibilities under Clause (c) and (h) of Section 29A of the Code were not applicable and, thus, Mr. Sushant Chabbra is eligible to be a Joint Resolution Applicant. Subsequently, it came to light that the MSME certificate furnished by Petitioner stood cancelled on 22nd December, 2017 and, thus, it emerged that Corporate Debtor was not an MSME as on the date of commencement of CIRP, i.e., 04th July, 2019. Considering the date of initiation of the CIRP proceedings of Corporate Debtor, the criteria for classification of an enterprise as MSME would have to be governed by the provisions of Ministry of MSME Office Memorandum (OM) F. No. 12(4)/2017-SME dated 08th March 2017, as per which gross block for investment in plant and machinery as shown in the audit accounts were taken into account - It can be seen that that investment in plant and machinery in the three years preceding the commencement of CIRP was more than INR 10 crores. Therefore, in terms of Ministry of MSME Office Memorandum dated 08th March, 2017, Corporate Debtor was not an MSME. In light of the new information received by IBBI, in the opinion of the Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh: Mr. Sanjeev Sehgal, Mr. Anshu Kumar Mishra, Mr. Harshit Sharma and Ms. Sunita Chaubey, Advocates. For the Respondent Through: Ms. Madhavi Diwan, Senior Advocate with Mr. Sahil Monga and Ms. Alekhya Sattigeri, Advocates. SANJEEV NARULA, J. (ORAL): 1. The Petitioner s grievance arises from order dated 12th January, 2024, [ Impugned Order ] passed by the Respondent/ Insolvency and Bankruptcy Board of India [ IBBI ] in relation to the Corporate Insolvency Resolution Process [ CIRP ] of Trading Engineers (International) Limited. [ Corporate Debtor ]. BRIEF FACTS 2. The background leading to the filing of the present petition is as follows: 2.1. The Petitioner is an Insolvency Professional registered with IBBI. He is a chartered accountant and cost and management accountant with over two decades of experience in Auditing Finance Taxation Account. Petitioner has been handling several assignments of CIRP as delineated in the petition. 2.2. Through order dated 04th July, 2019, National Company Law Tribunal [ NCLT ] appointed Petitioner as an Interim Resolution Professional and his appointment was later confirmed as the Resolution Professional by the Committee of Creditors [ CoC ] in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to the First SCN whereby Petitioner was exonerated and no adverse finding was rendered against him, Respondent has, on identical grounds and factual background, issued the Second SCN. While deciding the Second SCN, the Disciplinary Committee has failed to consider its earlier decision which was decided in favour of Petitioner. The said decision has been rendered under pressure of multiple complaints making allegations against the Disciplinary Committee itself. 3.3. The proceedings initiated through the Second SCN are against the principles of res judicata as provided under Section 11 of the Code of Civil Procedure, 1908, which prescribes that no suit which is directly or indirectly tried in a former suit can be tried again. Since identical grounds which form the basis of Second SCN resulting in the Impugned Order were considered in the first round pursuant to First SCN, the Impugned Order is ex-facie misconceived and arbitrary. Reliance is placed on the judgment of Supreme Court in Dr. Chetkar Jha v. Viswanath Prasad Verma Ors. 1970 AIR 1832., and Hari Vishnu Kamath v. Syed Ahmad Ishaque and Others 1955 AIR 233. 3.4. As regards eligibility of Mr. Sushant Chabbra as a Joint Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under consideration before the CoC of the Corporate Debtor. ANALYSIS AND FINDINGS 5. Heard. 6. As regards the First SCN, IBBI dealt with three contraventions wherein the contravention-III dealt with inclusion of Mr. Sushant Chabbra, a suspended director of the Corporate Debtor, as a Joint Resolution Applicant. The violations highlighted in the First SCN pertaining to Mr. Sushant Chabbra are as follows: III. Last minute inclusion of member of suspended management as joint resolution applicant i. It is observed from the minutes of the 10th CoC meeting held on 04-08-2020, that presentations were made by two Prospective Resolution Applicants i.e., Suncare Formulations Pvt Ltd. and Conquerent Control Systems Pvt Ltd (Conquerent) on their respective resolution plan. Association of Mr. Sushant Chhabra with resolution applicant Conquerent was nowhere found mentioned therein though Mr. Chabbra was present in the meeting in his capacity as member of suspended management of the CD. A copy of the minutes of 10th CoC meeting is annexed as Annexure-E. ii. It is, however, observed from the minutes of the 12th CoC meeting held on 10-09-2020, that Mr. Sushant Chabra was also one of the partners i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above, the Board is of the prima facie view that you have inter alia violated Sections 208(2)(a) and 208(2)(e), read with Clauses 1, 2, 3, 5, 9 and 14 of the Code of Conduct. 7. In contrast, in the Second SCN, the violations against eligibility of Mr. Sushant Chabbra are as follows: Issue related to eligibility of Shri Sushant Chabbra, as a joint resolution applicant: i. In the present matter, CIRP of the CD was irritated under Section 9 of the Code vide order dated 04th July 2019 of the Adjudicating Authority (AA), and you were appointed as an IRP. Later, you were confirmed as RP. ii. Committee of Creditors (CoC) in its 17th meeting held on 15% February 2021 approved the resolution plan submitted by M/s Conquerent Control System Pvt Ltd (Conquerent) jointly with Mr. Sushant Chabbra. It is observed that Mr. Sushant Chabbra, who is a joint Successful Resolution Applicant (SRA) is a suspended director of CD. You in your reply to IA have stated that the CD has been registered as a micro, small and medium enterprises (MSME) since 2007 and in support thereof, you have attached Udyog Aadhar Registration Certificate dated 31.10.2017. It is your contention that since CD has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s more than 10 crores. Therefore, in terms of Ministry of MSME OM dated 8th March 2017, CD was not a MSME based on above criteria. vi. Section 30 of the Code provides as under: 30. Submission of resolution plan. (1) A resolution applicant may submit a resolution plan [along with an affidavit stating that he is eligible under section 294 to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan (e) does not contravene any of the provisions of the law for the time being in force. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2) vii. As per section 30 (2) of the Code, it was your duty to examine each resolution plan and confirm that the plan does not contravene any of the provisions of the law for the time being in force. It is, however, observed that despite CD not being a MSME at the time of commencement of CIRP of the CD, you allowed submission of the resolution plan by ex-director of the CD as one of joint resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment in plant and machinery (Rs. In Crs.) 16.78 16.86 16.86 It can be seen that that investment in plant and machinery in the three years preceding the commencement of CIRP was more than INR 10 crores. Therefore, in terms of Ministry of MSME Office Memorandum dated 08th March, 2017, Corporate Debtor was not an MSME based on above criteria. 10. It also emerges that while the Resolution Plan proposed by Conquerent Control Systems Private Limited and Mr. Sushant Chabbra was pending consideration, in 2020, the Petitioner filed an application for Avoidance Transactions in the CIRP of Unitech Machines Limited, where Mr. Sushant Chabbra was also impleaded as a Respondent. This fact was also not revealed to CoC while discussing the eligibility of Mr. Sushant Chabbra as a Joint Resolution Applicant for Corporate Debtor. 11. In light of the new information received by IBBI, in the opinion of the Court, the foundation of the Second SCN is based on a different issue altogether. Thus, Petitioner s thrust of arguments that SCN is only a mirror copy of the First SCN and the principles of res judicata would apply, is not appealing. The concerns with respect to Mr. Chabbra s eligibility as dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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